Unblocking traffic congestion: A map to Australian road pricing schemes

A map to road pricing schemes in Australia

Traffic congestion is one of the biggest challenges facing Australian cities and regions. It is affecting our livability, productivity and global reputation as a destination of choice for investment. Despite several independent bodies including Infrastructure Australia, the Henry Tax Review and the Productivity Commission calling for a road user charging scheme for Australia, there has been little action.

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Road user charging can help manage demand as well as provide a more equitable and reliable source of funds for investing in infrastructure. It is time we act on the advice from these respected bodies. A detailed study including a trial of different road user charging models is needed to establish the model and pricing regime that will be suited to each city.

A road pricing trial will help to build the political and public support for agreeing on and implementing the right scheme.

Road pricing models

Effective road pricing schemes can not only assist with managing demand, but can also provide the funding necessary to address the transport infrastructure bottlenecks — thereby addressing both the demand and supply side factors.

There are four main models of road pricing schemes:

Location specific (cordon and area charge)

Corridor specific

Partial network and

Whole-of-network charging.

Within these models, pricing can be targeted on the time of day, a particular vehicle fleet type, or distance travelled.

Economic contribution of road pricing in Australia

Australian cities have used road pricing, via toll roads, (a form of corridor specific road pricing scheme) for over 70 years. Australia has 16 toll roads in Sydney, Melbourne and Brisbane. Implementing road pricing in the form of tolls enabled these infrastructure projects to be delivered earlier than would have been possible under a fully government funded model.

KPMG estimates that the 16 toll roads in Australia directly contribute approximately A$7bn per year in economic, social and environmental benefits. This is the opportunity cost of delaying the delivery of the 16 roads by every single year.

Nine considerations for implementing road pricing

Infrastructure Australia recognises that reform will be challenging, not least due to the likely political pressure from vested interest groups. In order for change to happen, the political will must be strong enough for the government to make necessary reforms for the benefit of the economy and the broader community.

The potential benefits of this reform for Australians are substantial. KPMG recognises that road pricing schemes are highly complex. They require careful consideration of the various models, and other factors such as equity, particularly for disadvantaged communities or areas which lack alternative transport networks (including alternative road and/or public transport).

Charging model

Pricing

Use of revenue

Political support

Public and industry support

Legal support

Organisational arrangements

Financial and administrative procedures

Use of technology.

Governments tend to focus on the last of these elements, however, it is the lack of clarity about the first six that present real challenges.